Chakana Copper (TSX-V: PERU) - 4,000m Drill Program Scheduled for March 2023

Chakana Copper Corp. is a Canadian-based minerals exploration company and through its wholly-owned Peruvian subsidiary, Chakana Resources S.A.C. is currently advancing the Soledad project near Aija, in the Ancash region of the highly prolific Miocene mineral belt of Peru. The company’s Executive Management Team and Board have a proven track record of success in the minerals industry from capital raises, exploration, discovery, development, and monetizing the asset through divestment.

Matt Gordon caught up with David Kelly, President, CEO, and Director, Chakana Copper. Mr. Kelley is an economic geologist, and an exploration geochemist with over 25 years of international exploration experience across the Americas, Central Asia, and Australasia. Most recently, David was responsible for developing the exploration program at Las Bambas for MMG as General Manager of Exploration - Americas. He previously worked for Oz Minerals, Zinifex, Newmont, WMC, BHP, Westmont Mining, and Gold Standard. He was directly involved in the discovery of the Zuun Mod Mo-Cu deposit in Mongolia, the Wayamaga Gold deposit in French Guiana, and the High Lake East VHMS deposit in Nunavut. His educational credentials include a B.Sc. degree in geology from Colorado State University and an M.Sc. degree in geology/geochemistry from the Colorado School of Mines. He previously served as President of both the Society of Economic Geologists Foundation and the Association of Applied Geochemists.

Company Overview

Chakana Copper is a minerals exploration company that is currently advancing the Soledad project near Aija, in the Ancash region of the highly prolific Miocene mineral belt of Peru. The company aims to find and advance mineral projects to an economic resource within a single commodity cycle for further development by mid-tier and/or major mining companies. It is highly selective in its approach, seeking de-risked projects that have the characteristics of large above-grade mineral systems with significant upside potential. The company employs the latest technological innovations to test the upside potential of projects with aggressively funded exploration programs. The company was founded in 2011 and is headquartered in Vancouver, Canada. It is listed on the Toronto Stock Exchange (TSX-V: PERU), the OTC Markets (OTCQX: CHKKF), and the Frankfurt Stock Exchange (FRA: 1ZX).

Chakana Copper is a junior explorer with a highly significant copper-gold-silver discovery in the Ancash province of Peru. Earlier this year, the company published its first inferred resource on the asset, 6.7m at about 1.8% copper equivalent. The mineralization found here is hosted in tourmaline breccia pipes. The company has identified extremely high-grade zones within the breccia pipes.

During the drill operations, the company hit massive sulphides that were found to be 90% copper pyrite. The company anticipates that the project has a lot of untapped potential since it has drilled only 18% of the overall targets so far. These targets have enabled the company to define the project, however, the most exciting targets are yet to be drilled. The company is working on advancing its permit so that it can access the remaining targets. The current market landscape makes it a good time for investing in battery metal companies such as Chakana Copper.

Peru’s Political Landscape

Peru recently saw a change in government when Pedro Castillo was ousted by Congress. The country has had 6 presidents in 6 years, which can raise concerns for sovereign risks and political stability. The company sees the recent development in a positive light. When Pedro Castillo was elected, the company didn’t feel that he’d have a significant impact on the mining industry because Peru has already been a mining-focused country for a long time. Castillo’s agenda was pro-indigenous rights as opposed to pro-mining or pro-business. However, he did not deliver on that front. His administration has been largely ineffective and he is currently under multiple investigations for corruption.

The company believes that things can only get better from here and the recent developments are steps in the right direction for Peru. The current President, Dina Boluarte is much more qualified for the position. Although she’s from the left and belongs to the same party as Pedro Castillo was initially a part of, they have been ousted from the party. Dina has a thin line to walk where she would need to come to the center and try building a coalition. Recently, Dina appointed 17 of 19 cabinet members which is an impressive development.

The Minister of Energy and Mines has had a highly successful career with 37 years of experience in the oil and gas business. 8 of the 17 ministers appointed so far are women. Dina is the first woman President in Peru’s history. Chakana Copper is looking forward to a new administration, which is considered a positive development for Peru.

So far, the current President has shown to be very decisive. Appointing a highly qualified cabinet is considered as a step in the right direction. Originally, Dina was supposed to stand for the remainder of Pedro Castillo’s term, until 2026. However, following a lot of protesting and outrage from Castillo’s supporters demanding new elections, Dina put a proposal in front of congress to move the elections to April 2024, 2 years earlier than the actual date.

According to Chakana Copper, Dina is demonstrating decisiveness and a willingness to listen to the people. The company anticipates that the next elections will put Peru in a good position, reassuring the foreign markets that the country offers an investable jurisdiction. Meanwhile, the mining industry is expected to continue functioning as usual.

Despite the protests in the country and the problems in Las Bambas, cooper production hasn’t stopped. The mining industry is moving ahead, producing copper, lead, zinc, gold, and silver. Mining will continue in Peru and in the short term, there aren’t any major changes expected.

Targets 2023 and Beyond

Chakana Copper has worked really hard to protect its capital as much as possible. It has analyzed every business aspect from a cost management standpoint, looking to possible optimizations while ensuring that money is going into the ground. In the near future, the company will announce the terms of the renegotiated agreement with Condor, spreading out the payment schedules for 1 of the 2 option agreements. The company has done the same on the second agreement, the details for which are expected to be released shortly.

Raising additional capital has enabled the company to deploy more funds into the ground. The company continues to be a discovery story. It currently has a high-grade resource that is open at depth. The asset is located in an active mining district. The nearest operating mine is 500m east of the property boundary. The company has a robust high-grade resource that is expected to get bigger with time. It also has an exceptional exploration upside which is recognized globally by some of the biggest mining companies in the world.

Chakana Copper has an agreement with Barrick Gold on the south side, which is anticipated to be one of the most impressive gold anomalies ever seen. Notably, Goldfields is an 18% shareholder of Chakana Copper. The company is in a unique position where it has had validation from the industry’s best miners for a project that features high-grade mineralization and is based in an exceptional location.

Despite a tough last year, the company has continued to post exceptional results. The main setback was the lack of a drilling permit for the south side, which has been challenging. Peru’s permitting process has been incredibly slow, regardless of the ongoing political situation. The country is bureaucratic and has the involvement of multiple agencies in the permitting and approval process. The company has worked really hard and is now close to acquiring the permit for the south side of the deposit. Last week, ANA (National Water Authority of Peru) approved the permit, which was sent back to the Ministry of Energy and Mines. The company is currently awaiting notification of the approval for the environmental permit.

Following the acquisition of the permit, the company will enter the final stage which is called the initiation of activities. If things go well during the final stage, the company could potentially acquire the drill permit for the south side by January 2023. Notably, January and February are the months that experience the heaviest rain season in Peru. The company has had past experiences in drilling during the rainy season. To achieve this, the company built platforms and road access. Once the permit is in place, the company will decide to either drill in the middle of the rainy season or wait until March to initiate drill operations.

The company has some really exciting drill targets on the south side. It has been successful in advancing the permitting to the final stage. In the meantime, the company has provided community services by building a community meeting hall that was recently signed off by the locals.

Chakana Copper is also advancing the geo-metallurgical program targeting the high-grade resource on the north side. This region could potentially enter production quickly while the company continues exploration on other parts of the property, advancing the asset on multiple fronts. The company hasn’t seen any major delays in operations so far.

The company has been mindful of its capital expenditure. It recently got a $500,000 IGV refund that was approved yesterday. These funds serve as a welcome capital injection adding to the company’s existing $2.8M cash flow. 2022 was a tough year for mining companies for multiple reasons, and the company anticipates that 2023 is going to be significantly better.

The Copper Market

According to the company, as each month passes by, the importance of copper is being recognized in battery metals and as a green energy metal. Copper is gearing up to be the backbone of the green energy revolution. Not only is copper a great metal for economic growth, but it is also predominantly featured in every single green energy technology available, including wind, solar, and even nuclear energy where the material is used for transmission and storage. As the major mines are decreasing in grade and the older mines are running out of production and ore, copper is likely to face a supply crunch going forward. New mines that are coming online won’t be able to fill the ever-increasing supply gap. Furthermore, the looming supply gap is expected to get even worse with the uptake of clean energy. The company anticipates that these developments will work in favor of all copper companies in the industry.

In recent times, the company has had a lot of conversations with opportunistic investors. The value investors have shown a lot of interest in the company’s story, its track record of discovery, and the upside potential. There have been a lot of investors that have taken advantage of the market conditions by taking a contrarian approach. Last week, a large volume of the stock experienced movement as people are trying to take advantage of the tax loss selling. Despite this, the company has been successful in maintaining its share price for the most part.

Based on these developments, the company anticipates that smart retail investors are coming in and recognizing the project’s value. Chakana Copper currently has 190,000oz of gold, 11.7Moz silver, and 130Mlbs of copper in its initial resource. Since the deposit is open in multiple directions, it is going to get better with time. In terms of dollars per gold ounce in the ground, the company is currently valued at $13/oz, while the current gold price is at $1,800/oz. Smart investors are picking up on this and making the most of the opportunity.

Copper continues to be the company’s main focus. The deposit’s geology has provided exciting results so far. As it moves deeper into the system through drilling, the company is seeing a deeper part of the geology which is helping in determining the source of the mineralization. This is a part of the ongoing work. The company intends to drill the south side targets while simultaneously building its knowledge of what’s driving the system. This is an exciting part of the geologic story that continues to evolve.

Chakana Copper is looking to demonstrate that it's running an optimized business. It is focused on the bottom line and is spending the shareholders’ money as carefully as possible. The asset has a lot of exploration upside and the investors have shown a lot of trust in the Management’s abilities. Goldfields is a strategic shareholder in Chakana Copper. The former believes that the asset has tier-1 discovery potential, which places it in the top quartile of all global discoveries. The trust in the company’s abilities offers significant validation for the team. The company is looking to drill smartly to test the deposit’s untapped potential. At the same time, the company is looking to advance its knowledge of the resource so that it has an option in the future to put a small tonnage, high-grade operation into production on the north side.

The company has hit massive sulphide zones in the breccia pipes that are 27% copper and 1kg of silver. The exploration of the breccia pipes continues to be open. This allows the company to try out different strategies. The company has a strong belief in the deposit’s potential along with strong backing from the institutional and strategic shareholders. As the company continues to explore, it does not anticipate a radical change in the current strategy.

Chakana Copper is part of the green energy revolution. From an environmental standpoint, it is better to produce copper at a high grade as opposed to a lower grade. The CO2 emissions associated with a giant disseminated low-grade copper deposit versus a high-grade copper deposit are starkly different.

The company is prioritizing its performance and is working towards the permit for drilling on the south side. The permit, once acquired, will open up a 2,500-hectare area on the south side. The company has already concluded the needed exploration and is currently working on fine-tuning the target selection and the number of drill holes. A 4,000m drill program is planned for the south side. The company is also considering an additional 1,000m of drilling for a deeper test on the north side in order to better understand the factors that are driving the mineral system.

Chakana Copper wants to be judged on the knowledge gained and its ability to advance the understanding of the resource. Currently, it is carrying out a geo-metallurgical study. It has engaged a highly-skilled metallurgist to assist with the ongoing geo-metallurgical mineralogical work. Additionally, the company is sponsoring a Ph.D. study at the University of Tasmania at CODES (Center for Ore Deposit and Earth Sciences) on the geo-metallurgical characteristics of the Soledad breccia pipe.

On the ESG (Environmental, Social, and Governance) front, the company recently completed a 2-story community hall. The center is based in a very small community of 150 people. The community center features all the modern facilities including bathrooms, running water, and electricity. It serves as a great example of the collaboration between a local community and a mining company, demonstrating the mutual benefits stem from the relationship.

The company anticipates that it will be in a stronger position by the end of 2023 and the market will judge it based on the share price performance, which, in turn, will be rewarding for the shareholders.

To find out more, go to the Chakana Copper website